LG Expanding to NJ: An Overview of LG Corporation - Essay Sample

Introduction

The current global competition is forcing companies to expand markets to other countries. However, establishing a business in a foreign land is a process affected by many complex political and social-economic factors. As a result, firms' CEOs and project managers need to understand how their firms operate. Therefore, the purpose of this paper is to provide the reader with an overview of LG Corporation, which considers establishing headquarters in the Hudson River in New Jersey. The review covers five significant sectors of the company. The first section outlines the business profile, including products, competitor review and industry. Secondly, the analysis defines governmental action likely to affect the project in New Jersey. Thirdly, the study outlines the organizational structure and leadership and their responses to previous local law. The fourth section highlights internal and external stakeholders and analyses their actions that influence the political process to advocate for business interests. Lastly, the study analyzes the financial performance of LG Corporation and the initial reaction of the company to the governmental actions in New Jersey.

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Business Profile

LG Corporation is a holding company that deals with the management of subsidiary firms. The company was established on January 5, 1947, in Seoul, South Korea. LG Corporation runs through subsidiaries, which include: LG Chem, LG CNS, LG Electronics, Lg Siltron, LG Solar Energy, SEVEONE, LUSEM, and LG Sports. The company operates across three industries, including electronic, chemical, and telecommunication services. In the electronic industry, the company provides products such as LG Display and Innotek. In the chemical industry, significant products include LG Chem, LG MMA, and LG Household & Health Care. Telecommunication services comprise of LG Uplus, LG CNS, and SERVEONE.

LG Corporation faces stiff competition from two top rivals and one minor, which include: Samsung, Panasonic, and iRobot. In 2019, LG Corporation made total revenues of 51.8Billion USD, whereas Samsung, which is the market leader, made total revenues of 189.2Billion USD (Glowik, 2016). Panasonic is the second-largest seller in the market after Samsung and earned total revenues of 75.1Billion USD. However, iRobot is a minor competitor well upcoming in the industry and taking the small markets. Last year iRobot made total revenues of 1.2Billion USD. Samsung has 309,630 employees, Panasonic 271,678 staff, while iRobot has 1,128 workers compared to 73,773 workers of LG Corporation. Therefore, Samsung has the largest market share, followed by Panasonic as LG Corporation ranks third.

Like any other organization, LG Corporation has several opportunities present in the industry. The electronic market is increasing, and thus, LG Corporation can expand in the industry and gain more customers. Also, the company can invent products and sell them to the current market to increase sales. Moreover, LG Corporation can innovate the existing products to attract potential buyers who will expand its client base. Focusing on both invention and innovation will benefit LG Corporation in becoming a market leader and thus increase market share.

Nevertheless, LG Corporation faces some significant threats in the industry. The two top competitors (Samsung and Panasonic) of LG Corporation continue to improve their products to fish the current customers of the company. Therefore, LG Corporation requires to work harder than the competitors to retain its clients. Additionally, global economic performance is unfortunate, making it difficult for people to satisfy basic needs (Felice et al., 2013). As a result, customers forego purchasing electronics, considering them as a luxury. Market boomers like the iRobot are capturing the small markets who are the potential future buyers of LG Corporation. Therefore, LG Corporation is expanding to limited markets.

Governmental Action

The decision by LG Corporation to construct new headquarters in the Hudson River in New Jersey means that the company will encounter political risks in the foreign land. Typically, the regulatory factors cut across all the cities as they originate from the national government. Therefore, it is imperative to understand that the policies made by the US government affect all the towns. The US government is preparing for elections, which are causing chaos between the democrats and the republicans. The midterm elections led to a substantial number of retirements among the citizens. As a result, President Trump demanded an oversight and investigation of the public companies in the country. A report on the inquiry shows that public organization CEOs, trade, data privacy, and cybersecurity are the concerns that might be affected by the new policies and reforms (Papazafeiropoulou, 2004).

Further, the democrats are advocating for the sustenance of the North American Free Trade Agreement (NAFTA) enacted during the Obama-era to promote businesses (Romalis, 2007). Moreso, business mafias like Warren are demanding changes in the financial sector, which might increase costs of compliance and capital. Also, the technology companies are put under pressure to adopt privacy protection policies, especially monitoring any content that may impact the elections. Therefore, LG Corporation will experience increased compliance and capital costs due to the newly imposed reforms and privacy laws.

Organisation & Teams

LG Corporation has a hierarchical structure with a CEO at the top of the hierarchy. The staff comprises a chain of directors who report to the vice-chairperson who is below the CEO. Some of the team include Chief Executing Officer, Chief Technical Officer, Chief Financial Officer, Global Marketing Officer, Business Support Officer, Chief Human Resource Officer, Smart Business Centre, Cooperate Design Centre, and Quality Centre. The company distributes all the workers in four significant teams, including home entertainment, mobile communication, home appliance, air conditioning & solution, and vehicle component. The home entertainment team runs under the management of Havis Kwon. Bon-Joon Koo manages the electronics team, which is one of the most performing subsidiaries of LG Corporation. Jong-Seok Park administers the mobile services team while Seong Jin Jo leads the home appliance group.

All the above leaders and staffs work together to achieve a common goal of increasing the holding company's profitability. Also, the teams have shown good responses to governmental actions like adopting go-green manufacturing activities. For example, in 2011, the government of South Korea ordered all manufacturers of electronics to establish eco-friendly manufacturing processes to reduce emissions of carbon dioxide. LG Electronics responded to the directive very fast and professionally. The group, under the leadership of Bon-Joon Koo, decided to replace the conventional magnesium for manufacturing phones with a more eco-friendly magnesium alloy to reduce carbon dioxide emissions by 4kg. The Korea Institue of Industrial Technology manufactured the eco-magnesium composite with funding from the government. Three Korean-based companies signed an agreement with LG Electronics to help in producing the eco-magnesium alloy. The contract stipulated that the three companies would provide technical assistance as well as training in carbon credit trading.

Stakeholders

The stakeholders of LG Corporation include public and privately held companies that run independently. The public companies include LG Chem, LG Electronics, LG Households & Health Care, LG Life Sciences, LG Uplus, and LG Hausys. There are two other stakeholders under LG Electronics, namely LG Display and LG Innotek. On the other hand, LG Corporation has five privately-held firms, which include Serveone, LG CNS, LG Siltron, LG MMA and LUSEM. Also, it is imperative to understand there are other indirect stakeholders such as the government and the society that affect the operations of the organization. The diagram below represents the stake ownership structure of LG Corporation.

The stakeholders of a company are significant influencers of the political processes that advocate for business interests (Kuzmin & Khilukha, 2016). LG stakeholders are an excellent example in the way they have influenced political activities to safeguard their business motives. Joining the Chaebols is has helped the stakeholders to have a significant contribution in controlling Korean legislative powers. The Chaebols comprises a group of stakeholders representatives from different companies who come together to discuss substantial political and social-economic factors that affect their business performance.

Also, the Chaebols have the mandate to form unions to represent them in the political arena. For example, a group of Chaebols formed the Federation of Korean Industries in 1963 to promote their interests in the government (Ravenhill, 2003). Through the FKI, LG stakeholders have managed to fight for their rights, which would have been prone to seizure by a group of political leaders. For example, during Park's drive as the president, the government imposed severe initiatives targeting to eliminate subsidiaries where LG and Samsung were the targets. However, through the FKI, the LG stakeholders (among the Chaebols) managed to change the directive to retain the subsidiaries. LG stakeholders, through Chaebols, continue to influence the political process in the country up to date.

Current Business Environment

As of 2018, the annual report shows that LG Corporation made total revenues of 61.3t KRW, which was a fall from the previous 61.4t KRW in 2017. The gross profit amounted to 15.1t KRW, an increase from the last 14.7t KRW in 2017. Total assets in 2018 were 44.3t KRW, a rise from 41.t KRW in 2017. Whereas, total liabilities were 28.0t KRW in 2018, rising from 26.5t KRW in 2017. The gross profit in 2018 was 15.t KRW, an increase from 14.7t KRW in 2017. The figure below shows the annual financial performance of LG Corporation from 2015 to 2018.

The current political climate in the US suggests potential reforms in trade affairs and the privacy of data. As a result, LG Corporation will require to make necessary adjustments in budgeting the compliance costs and capital costs. Therefore, assuming that the compliance and capital cost will hike, the stakeholders have expanded the budget to cater for the expenses. Also, the Chaebols, through the FKI, are bargaining trade reforms with the NAFTA to reduce compliance and capital costs (Lee & MacMillan, 2008). Further, the New Jersey society is much excited to have the LG Corporation in town. LG Corporation is a strong selling brand across most US states and therefore creating a high demand in the region. However, the New Jersey community consider purchasing from retailers as being expensive and thus feel that the establishment of LG Corporation manufacturing site would lower prices. As a result, society is pushing for the project by requesting the government to provide favorable terms to the company. On the contrary, retailers are joining the Democrats to push for changes in the finance sector since they will profits more from foreign investors.

Conclusion

The above study is a precise overview of the LG Corporation. The paper starts with an introduction outlining the components under review. After the presentation, the business profile identifies the company's foundation, products and servi...